Professional Liability Insurance News & Information

Tort reform lowers malpractice payouts, lawsuits in Texas

Sep 4

9/4/2013 7:15 AM  RssIcon

Tort reform is a hot topic across the U.S.
Tort reform is a hot topic across the U.S.
Tort reform has been a major topic of conversation in the U.S., and states that have gone through with it have seen a reduced amount of malpractice claims and lower payouts - a good sign for healthcare professionals who could begin to see increased professional liability risk with more than 30 million additional Americans obtaining insurance in the coming year. 

One state that recently experienced the benefits of tort reform is Texas, where lawsuits resolved in a year fell nearly 66 percent between 2003 and 2011, and the average payout dropped 22 percent to around $199,000, according to The Associated Press. 

Texas' reform was enacted on September 1, 2003, and limited the damages that could be paid out for pain and suffering in the majority of malpractice lawsuits to $250,000. Part of the reason supporters said tort reform has been successful is the fact that it has helped keep insurance premiums in check. With rising healthcare costs, there becomes a risk of medical professionals leaving the state, which wouldn't be good - seeing as there is currently a shortage of doctors, nurses and other staff. 

However, not everybody is a fan of tort reform. In fact, trial lawyers claim it leads to the families of injured or killed patients not receiving the compensation they deserve. Additionally, the reduction in payouts has made it more difficult for people to obtain a lawyer, as many legal professionals won't take on a case due to the fact that the financial reward would be so small. 

California tort reform currently being debated
The Golden State is one of 31 that has a cap on pain and suffering - a law that is currently being fought by Californians. Citizens of the state want the cap increased to account for inflation and other factors. 

"The law was created back in 1975," Kathy Olsen, the mother of a malpractice victim, told ABC 10 News. "The economy has changed, cost of living has changed ... to me, everyone has gotten a raise but the law hasn't changed. We've let this go on way too long. We hope the legislation would just index it to the economics from 1975 to now, which could come to $1.1 million."

Olsen and her husband saw their son Steven suffer brain damage during an operation to address a brain abscess back in 1994. During their battle in court against the healthcare professional and provider, the Olsen's were awarded $7.1 million by a jury. Unfortunately, California's malpractice laws capped that reward at $250,000, leading the family to lose out on nearly $6.9 million. 

The biggest fear of raising the cap on pain and suffering damages is that it would drive healthcare professionals away from the state, which is the last thing that California needs right now. But it is clear that this will remain a hot debate topic all the way up until the November 2014 ballot.

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